Soar stock prices of Twitter

The actions of the social network Twitter closed at U.S. $ 44.90, that is, over 73% of its initial value, amid strong demand during the first day of quotes in the NYSE. The IPO was $ 26. The company is now valued at U.S. $ 31,000 million. An estimated 13 million shares were bought were once available one hour after Wall Street opened. Its Initial Public Offering (IPO) was performed to capture investors interested in having a stake in Twitter. In this way, raise capital and will become a public company. But many wonder how an organization evaluates commercial balances showing no income. What is his profit? What challenges do you expect to hit the market? “There are two elements to determine the value of a company. Accountancy situation is analyzed, such as cash flow, or you consider the price others pay for something similar. Latter is the case of Twitter, investors take into account the value of similar companies, such as Facebook or LinkedIn, and from there, set a dollar, “he tells the BBC Aswath Damodaran, professor of corporate finance at New York University. This methodology, however, has risks. “The problem with this assessment is that it could create a bubble in the value of technology companies,” says Damodaran. Graphic: The growth of Twitter >> The key to success Twitter is worth an estimated U.S. $ 17,000 million. During its first year, the site microbloging unnoticed among users. Departed when young techies discovered it was a good alternative for sharing ideas. From that time, had a different meaning for everyone. “The particular use that give people is what explains its popularity. Can serve to spread gossip or news,” the technology correspondent for BBC, Rory Cellan-Jones. Biz Stone, cofounder of Twitter, uses the analogy of a flock of birds to explain their success. “When they fly around an object look beautiful, looks like a complex choreography, but it is not. It is simply the real-time behavior of individuals acting as a body.” This concept is important to understand the business model that Twitter could take to allow himself to be profitable. James Whatley, director of social media advertising company Ogilvy in London, believes it is possible that the company makes money. “They control the messages sent by users, allowing them to offer specific companies appear in the feed of a person with certain interests. For example, if I talk about video games, Microsoft would be promoted their products with me. This known as tweets promoted. A similar model is implemented with the trends. ” The two sides of the coin The site “microbloging” announced its participation in a public offering through a tweet. Another promising possibility as regards the generation of the association is television money that the company recently announced. “According to the information available at this time, users interact more on Twitter while watching TV, which will increase the purchase of advertising tweets from these companies,” says Whatley. Along the way, the site microbloging also have to overcome obstacles related, ironically, with advertising. Kate Bevan, who specializes in writing about technology and social networks, is convinced that the key at this stage is in the balance trade. “There are already sponsored advertising and that annoys users because it interferes with their conversation, so I will have to find a way not to scare or bombarding them with advertisements.” It is also important to consider the current market situation. “Twitter enters a territory that has many players, there are a lot of companies competing for advertising, so an important aspect will be to achieve apart from others,” adds Bevan. Money and more money Unlike Facebook, Twitter executives decided to go to market through a confidential reporting process. It is a mechanism that provides U.S. law (whose name is Jumpstart Our Business Startups Act) that allows a company to start without disclosing IPO at the initial stage. For many, this created suspicions. “The concept has been misunderstood, as it serves to give the company some protection against the volatility and market uncertainty. If prices fall or something goes wrong, not end discredited, which would harm investors and users, has the opportunity to try again.